Divorce and Cryptocurrency: What You Need to Know

November 22, 2018August 4, 2020
by Angie

Divorce in California can be complicated – and it can be even more complicated when cryptocurrency is involved. Divorce and cryptocurrency are appearing together more frequently in court, so here’s what you need to know.

Divorce and Cryptocurrency: What You Need to Know

When you or your spouse owns cryptocurrency, your divorce requires a different type of financial valuation than other types of divorces do. Cryptocurrency value fluctuates – and it’s not just Bitcoin that surfaces in California divorces any more (though Bitcoin is the most valuable). Dozens of other types of cryptocurrency have cropped up over the past few years, including Ethereum, Dash and ZCash, and the courts have to ensure they’re valued properly to make sure settlements are fair and equitable. Bitcoin divorces – or, more appropriately now, cryptocurrency divorces, are becoming more common.

The Darker Side of Divorce and Cryptocurrency

Unfortunately, because of the nature of cryptocurrency, it’s not incredibly difficult for one spouse to acquire a significant stash of it and never let the other spouse know. It’s incredibly important for both parties to fully disclose their incomes.

If you suspect your spouse has cryptocurrency that he or she isn’t disclosing, it’s a good idea to talk to your Stockton divorce attorney about your concerns. Your attorney will be able to explain your options and work with you to determine how to ensure your spouse isn’t hiding cryptocurrency during your divorce. There are tools available to trace cryptocurrency, and courts are generally used to tackling cases that require tracking assets.

How Courts Value Cryptocurrency in Divorce

Your attorney may suggest that rather than valuing your shared cryptocurrency assets during divorce, you split the cryptocurrency itself. You can divide it fairly, regardless of what it’s worth, and it can simplify the property division process.

The issue is that cryptocurrency’s value fluctuates – sometimes wildly – and that makes it hard to assign it a dollar value. If you have your cryptocurrency valued today and you agree on a dollar amount that needs to change hands, it may not be worth the same amount by the time the judge signs your divorce decree. That can benefit you, or it can hurt you.

Generally speaking, you’ll use two copies of California’s Schedule of Assets and Debts to agree on how much cryptocurrency you have between you. You and your spouse are supposed to trade documents before the property division process begins – it’s sort-of a checks-and-balances system. If you and your spouse agree that everyone’s told the truth about his or her assets and debts, then you can begin dividing your property.

Is Cryptocurrency Separate Property or Community Property?

In a divorce, cryptocurrency can be separate property or community property. Typically:

If you entered the marriage with your own cryptocurrency, the courts will most likely consider it separate property. In many divorce cases, each person is entitled to his or her own separate property without sharing it with the other spouse.
If you acquired the cryptocurrency while you were married – even if one spouse had no idea the other was buying cryptocurrency – it’s usually considered community property. California law requires you to divide most community property equally. An exception may be if you acquired the cryptocurrency as a gift or inheritance that was intended only for you.

There’s no guarantee on how a judge will rule, however, and no attorney can make promises about the outcome of your case. Every case is different, and while these rules on separate and community property may apply in many cases, they may not exactly apply to yours.

Do You Need to Talk to a Lawyer About Divorce and Cryptocurrency?

We can help you if you’re dealing with a divorce and cryptocurrency division. It’s our mission to help you reach a fair and just settlement, so please call us at 209-910-9865 or contact us online to schedule an appointment with an attorney.

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Divorce

The Bitcoin Divorce: How Do Courts Divide Cryptocurrency?

February 27, 2018January 17, 2019
by Angie

Bitcoin and other cryptocurrencies are treated like property in a divorce – but how does division of these assets work in California? So far, it’s been a little bit tricky, so here’s what you need to know if your divorce involves Bitcoin or another cryptocurrency.

The Bitcoin Divorce: How Do Courts Divide Cryptocurrency?

When you’re talking to your Stockton divorce attorney about property division, make sure she knows that you have assets in Bitcoin. More separations involve cryptocurrencies than ever before, and in some cases, the values held in those currencies is exceptionally high. Like in any divorce, it’s imperative that both parties fully disclose the extent of their assets; if one doesn’t, the search for the funds can be time-consuming and expensive.

There are tools available to trace Bitcoin, according to Forbes, but many attorneys aren’t familiar with how to use them (or even familiar with the currency itself). However, courts are used to handling cases that require tracing assets – including those that are held offshore, which is a little similar to the types of Bitcoin holdings that are appearing in divorce court today.

Valuing Bitcoin During Divorce

Bitcoin’s value can fluctuate dramatically, which means it’s tough to pin down a dollar figure during divorce. What it’s worth when you file the papers isn’t necessarily the same as what it’s worth when the judge signs your divorce decree, so it’s not as straightforward as traditional investments are. You can’t count on the currency’s worth until the day your judge signs the final papers.

In some cases, it’s best for the partners to skip valuation and divide the Bitcoin itself. That way, it’s a fair split – and it causes fewer logistical problems throughout the divorce.

How is Bitcoin Divided in a Divorce?

Whether you and your ex-spouse choose to divide your Bitcoin assets or you value them and use them in the settlement, the courts treat the currency like it treats other types of property and assets. Each party will list their assets and the values of each on a Schedule of Assets and Debts (Form FL-142), and then exchange copies with the other party. If each party is satisfied that community assets and debts are fully disclosed, the property division phase of divorce can begin.

Community Property vs. Separate Property

If one or both parties to the divorce obtained Bitcoin or another cryptocurrency during the marriage, it’s likely to be considered community property. Under California law, spouses are supposed to divide community property equally.

If one or both parties came into the marriage with his or her own cryptocurrency, it’s likely to be considered separate property. It’s also likely to be considered separate property if one party inherited it or received it as a gift. Usually, separate property belongs to the same spouse throughout the marriage and during the divorce; it’s not typically subject to equal division like community property is.

Do You Need to Talk to a Stockton Divorce Lawyer About Bitcoin in Your Divorce?

We can help you if you’re dealing with a divorce that involves Bitcoin or another cryptocurrency. It’s our mission to help you reach a fair and just settlement, so please call us at 209-910-9865 or contact us online to schedule an appointment with an attorney.

Tag: <span>Cryptocurrency</span>

Divorce and Cryptocurrency: What You Need to Know

Divorce and Cryptocurrency: What You Need to Know

How Courts Value Cryptocurrency in Divorce

Is Cryptocurrency Separate Property or Community Property?

Do You Need to Talk to a Lawyer About Divorce and Cryptocurrency?

The Bitcoin Divorce: How Do Courts Divide Cryptocurrency?

The Bitcoin Divorce: How Do Courts Divide Cryptocurrency?

Valuing Bitcoin During Divorce

How is Bitcoin Divided in a Divorce?

Community Property vs. Separate Property

Do You Need to Talk to a Stockton Divorce Lawyer About Bitcoin in Your Divorce?